I'm just back from a whirlwind tour of lower Sonora, northern Sinaloa, and western Chihuahua states. I saw a lot of mining startups, many of which are reworkings of mines originally from the 16th to 19th centuries. Even in southern Arizona we are seeing the same phenomenon, particularly in copper.
Although the gold juniors and flyers are getting development funds by banks and venturers, they have a lot of competition for stock price support from the very large gold and silver metal ETF's in the US and elsewhere. Metals stock investors have long and bitter memories of the scams and failures of the 1980's and 90's, so even if penny stock traders are willing to risk it on golds as well as on techs, the gold majors are losing support as their costs rise and large portfolios get re-balanced. Holding the metals instead of always problematic stocks is appealing to those who are hedging portofolios rather than going for lottery-sized payoffs.
For nearly a year and a half I have expected to see a third wave high (second upwards push) from the 1999 low in gold. Gold's action has extended greatly, and the move from a year ago has comprised two thirds of the entire run from the 2001 secondary low.
From my perspective Elliott Wave is a way of describing events rather than being a highly probable predictive tool. Nevertheless it is a useful schematic diagram of where gold has been.
The first chart runs from the very large degree second wave low of 1976 to the present. The bull market from 1968 to September 1980 I have outlined in detail in this 2001 article at Gold Eagle: http://www.gold-eagle.com/editorials_01/drake043001.html
Since then we have had two major waves up with a corrective wave down from 1999 to 2001. I believe we are in a new bull market since 1999 which will likely last another 15-20 years. However, with the recent retest of the orthodox high of 720 at the September 1980 high, one must acknowledge that very long term bears have a point in calling this current spike an X or B wave in a continuing bear market.
Given convincing evidence from all markets that the Kondratieff Wave bottomed from 1998 to 2003, I give the bears very low odds.
The second chart is a closeup of the bull move from the 1999 low with my Elliott description. (The gold data are continuous one month forward COMEX gold futures.) If this labeling is correct, I would expect gold to decline at least to 560 at the end of the correction, and it could go lower during some part of the correction, and it could last many months. Recent sentiment, which I have discussed, suggests some sort of correction which may have begun this past week or two. One must be aware of the fact that runaway markets can subdivide their last wave and keep going after minor corrections, so it is never wise to close one's mind on a wave label.
I did lighten up on metals stocks in the week before last but did not and will not sell metals holdings.
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